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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-2.94 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -2.94 suggests that the company is not a manipulator.

VG' s 10-Year Beneish M-Score Range
Min: -5.34   Max: 0.99
Current: -2.94

-5.34
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.34. And the median was -3.01.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.0482+0.528 * 0.9805+0.404 * 1.0265+0.892 * 1.0324+0.115 * 0.8562
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9697+4.679 * -0.1035-0.327 * 1.1114
=-2.94

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $21.2 Mil.
Revenue was 219.73 + 214.601 + 214.737 + 218.882 = $868.0 Mil.
Gross Profit was 148.687 + 128.959 + 155.702 + 157.047 = $590.4 Mil.
Total Current Assets was $133.9 Mil.
Total Assets was $678.0 Mil.
Property, Plant and Equipment(Net PPE) was $46.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $53.2 Mil.
Selling, General & Admin. Expense(SGA) was $474.0 Mil.
Total Current Liabilities was $165.4 Mil.
Long-Term Debt was $157.9 Mil.
Net Income was 7.469 + 5.604 + 4.556 + 5.518 = $23.1 Mil.
Non Operating Income was -0.577 + -0.01 + -0.002 + 0.036 = $-0.6 Mil.
Cash Flow from Operations was 10.724 + 31.309 + 27.764 + 24.082 = $93.9 Mil.
Accounts Receivable was $19.6 Mil.
Revenue was 220.733 + 211.22 + 203.984 + 204.776 = $840.7 Mil.
Gross Profit was 151.574 + 125.56 + 141.567 + 142.032 = $560.7 Mil.
Total Current Assets was $122.1 Mil.
Total Assets was $596.7 Mil.
Property, Plant and Equipment(Net PPE) was $47.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.4 Mil.
Selling, General & Admin. Expense(SGA) was $473.4 Mil.
Total Current Liabilities was $174.1 Mil.
Long-Term Debt was $81.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(21.239 / 867.95) / (19.626 / 840.713)
=0.0244703 / 0.02334447
=1.0482

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(128.959 / 840.713) / (148.687 / 867.95)
=0.66697315 / 0.68021775
=0.9805

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (133.943 + 46.35) / 677.955) / (1 - (122.075 + 47.921) / 596.701)
=0.73406347 / 0.7151069
=1.0265

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=867.95 / 840.713
=1.0324

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(40.429 / (40.429 + 47.921)) / (53.205 / (53.205 + 46.35))
=0.45760045 / 0.53442821
=0.8562

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(473.952 / 867.95) / (473.435 / 840.713)
=0.5460591 / 0.5631351
=0.9697

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((157.912 + 165.384) / 677.955) / ((81.906 + 174.117) / 596.701)
=0.47686941 / 0.42906414
=1.1114

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(23.147 - -0.553 - 93.879) / 677.955
=-0.1035

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -2.94 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.72681.10840.89120.80990.86121.01481.19451.17150.98570.8735
GMI 0.8781.0160.84320.950.97221.02740.97150.99981.01850.9679
AQI 2.53730.83673.2811.49660.98070.61972.9950.90571.13381.1156
SGI 3.37732.25631.36361.08680.98770.99550.98340.97560.97641.0481
DEPI 2.0840.59820.64170.76760.89210.92341.13870.99360.86940.8027
SGAI 1.11990.71040.8570.68150.90440.891.02121.06211.04861.026
LVGI 2.6250.7811.43771.12750.99851.28070.31630.87971.15231.0363
TATA -0.1593-0.19730.0081-0.1108-0.112-0.56640.4862-0.152-0.0931-0.107
M-score -1.23-2.17-1.54-2.94-3.16-5.340.99-3.07-2.96-3.06

Vonage Holdings Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.17151.27981.24171.00360.98570.94720.91030.96580.87351.0482
GMI 0.99980.98830.9810.97971.01851.03011.02451.01630.9790.9805
AQI 0.90570.87320.91910.96831.13381.23251.23451.16841.11561.0265
SGI 0.97560.97220.97110.9770.97640.99811.02351.04091.04811.0324
DEPI 0.99360.96510.99460.8220.86940.79050.72980.8690.80270.8562
SGAI 1.06211.04611.05591.07741.04861.04421.03111.00230.99840.9697
LVGI 0.87970.95870.98631.04081.15231.04711.04511.07931.03631.1114
TATA -0.152-0.1506-0.1119-0.1413-0.0931-0.1139-0.1269-0.1334-0.107-0.1035
M-score -3.07-3.01-2.86-3.23-2.96-3.00-3.08-3.06-3.05-2.94
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